Declining gold prices again have pushed demand up on the Shanghai Gold Exchange as China buys the dips, while silver inventories on the Shanghai Futures Exchange continue to fall, gold researcher and GATA consultant Koos Jansen reports today. His analysis is posted at Bullion Star here:
Chinese Gold Demand 39t In Week 36, YTD 1290t
Robust Chinese gold demand is keeping up its pace. Chinese wholesale demand, measured by withdrawals from the Shanghai Gold Exchange vaults, was 39 tonnes in week 36 (September 1 - 5). Year to to date 1290 tonnes has been withdrawn from the SGE vaults.
Blue is weekly withdrawals in Kg, Green is withdrawals year to date in Kg.
The price of gold is in a down trend since August 12, causing the premium of gold on the SGE to increase. The Chinese are always trying to buy the dips; whenever gold goes down they buy, accumulating at the lowest prices. We can not only see this by SGE premiums moving inversed from the price of gold, but also from SGE withdrawals. The next chart shows the price of the SGE spot contract Au9999 combined with its premium over London spot. Note the inversed correlation between the red and the black line.